Given how competitive the Investment Banking landscape is, and how hard investment banks fight for deals and mandates, it is often easy to think of Investment Banks as coming up with all the ideas and then executing the deals with minimal input from the company itself. This gives too much credit to the Investment Bank and does not give enough credit to the corporations themselves. Big deals often involve large, sophisticated companies who understand their industry and sector better than an investment banker ever could. Most large corporations have their own internal teams which are constantly assessing opportunities but who also get involved in other parts of the corporation when the M&A landscape is quiet. They are called different things at different companies. At some companies they are M&A teams and at others they are Strategy teams but effectively they all do the same role.
What do internal M&A / Strategy teams do?
These teams are a mixture of ‘policy’ and execution teams. They help formulate the company’s strategy by providing research, analysis and opportunities for the company. If the senior management decide to take the company in a particular direction the strategy team will give them options about how they can do this. This applies to M&A as well. It is pretty rare for an Investment Banking Managing Director to walk into a board room and talk about an opportunity that the Internal M&A team hasn’t looked at before. The biggest difference between an Investment Banking pitch and a strategy team’s presentation will be the emphasis on the do nothing case. Investment Banks do not get paid if the company doesn’t decide to do anything while internal teams are trying to do what’s best for the company (although they do advance when they do deals). When a company bites the bullet and actually decides to do a deal (whether as part of a process or as an unsolicited bid) the internal team then clicks into execution mode. They are the team that deals with the Investment Bank during the bidding process and during the due diligence process. Although CEO’s like to look like they are the ones that did the deal they are often busy actually running the company. It is the internal M&A guys who are actually in the weeds of the deal getting it done from the company’s point of view.
Why would you want to do internal M&A / strategy?
Many people who like corporate finance hate the transactional nature of banking. You are on a deal for as long as it takes to pitch it and then execute it and you never see it again. When you are part of the internal M&A team you are part of the discussion about what gets done. You get to see it after it gets done and often you get to help with the integration of the business you have just bought. It allows people who like corporate finance and strategy to get involved with actually building a company instead of moving from one job to the next. It is the reason that many ex investment bankers actually move to these strategy type roles.
How do you get into an internal M&A / Strategy team?
It is incredibly hard to answer this question for several reasons
- The process is not standardised like it is for Investment Banking
- The demand for such roles varies with the company itself
If you want to get into an internal M&A team at a ‘hot’ company that does a lot of large prestigious deals such as Google you are going to be facing significant competition so you better have a resume that could get you into the best Investment Bank or (more likely) have already worked at an investment bank and having several years of banking experience under your belt. If you are looking at a role at a large corporate which doesn’t really do many deals and the role is more strategy based then it is often much easier to get in. Although it is hard to answer ‘how do I get in’ specifically there are some general ways you can break into these teams
Option 1: Get a graduate entry position in the finance team and transfer internally
This is how you would break into the job if you going straight from college or university. You will probably get rotated through several divisions and departments before they place you. During this rotation process you will really have to network your way into the internal M&A team. If you don’t end up there straight away you can always look at doing an internal transfer later on.
Option 2: Work in another field of finance and then lateral directly into the position
If you want to get directly into one of these teams then the best way to do this is to work in another financial or strategy position and then lateral directly into the team. A lot of ex-investment bankers leverage their experience to get into the ‘hot positions’ that I mentioned above. However you don’t need to have done investment banking to get one of these positions. I have seen all of the following break into great internal M&A teams:
- Accounting teams (even audit)
- Law firms
- Boutique and Bulge Bracket Investment Banks
- Other corporates (even those not in similar industry)
- Those actually doing non-financial jobs but who have industry specific knowledge
There isn’t a one size fits all approach like there is to banking. Although this offers you more opportunities, it also makes it that much more important that you start to ‘sculpt your story’ early. Thinking of going to a tech company? Do you have tech experience in your finance role? Are you in the tech team? Do you have a history of being interested in technology? Start thinking about this stuff early!
What do you do next? What are the exit opportunities like?
We often talk about exit opportunities for jobs that are more transitional in nature and that people use as starter jobs (like Investment Banking). It is less relevant for jobs which ‘come next’ like Internal M&A teams however people go on to do all sorts of things.
- Many CEOs have come from their internal strategy team
- Some go on to other corporates
- Some go back to advisory businesses once they have built up contacts
However once you enter these roles you don’t have the breadth of opportunities that you may have had after leaving banking or another generic finance role. You’re not going to get a Private Equity or VC role after leaving an internal M&A team. There are options however they are more limited than those ‘starter jobs’ I mentioned above.